Laurie owns land held for investment. The land's FMV is $150,000. Laurie's basis in the land is $130,000. Laurie exchanges the land, plus $20,000 of cash, for a warehouse owned by Trey. The warehouse is worth $210,000, but is subject to a mortgage of $40,000 which Laurie will assume. Trey's basis in the warehouse is $120,000. Laurie's basis in the warehouse received will be
A) $150,000.
B) $170,000.
C) $190,000.
D) $210,000.
C) $190,000.
Laurie will not recognize any gain on the like-kind exchange because she is not receiving any boot. Her basis in the warehouse will start with the adjusted basis of the land she transferred and will be increased by the cash she paid and the mortgage she assumes. $130,000 land adjusted basis + $20,000 cash paid + $40,000 mortgage assumed by taxpayer = $190,000.
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